The Kroger Co. et al v. Lidl US, LLC et al
MEMORANDUM OPINION. See for complete details. Signed by District Judge John A. Gibney, Jr. on 07/31/2017. (nbrow)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
KROGER CO., and THE KROGER
CO. OF MICHIGAN,
Civil Action No. 3:17-cv-480-JAG
LIDL US, LLC, and LIDL STIFTUNG
& CO. KG,
The Kroger Co. and The Kroger Co. of Michigan (collectively, "Kroger") bring this
unfair competition action against the defendants, Lidl US, LLC, and Lidl Stiftung & Co. KG
(collectively, "Lidl"). Kroger has moved the Court to preliminarily enjoin Lidl from using its
"PREFERRED SELECTION" word mark or logo ("Preferred Selection") on its grocery products
because consumers will likely confuse it with Kroger's "PRIVATE SELECTION" mark or logo
("Private Selection"). Lidl claims that its mark does not infringe on Kroger's mark and that, in
any event, Kroger has not made a clear showing of trademark infringement at the preliminary
injunction stage. The Court denies Kroger's motion for a preliminary injunction because Kroger
has not made a clear showing that it will succeed on the merits or that it will likely suffer
irreparable harm in the absence of an injunction.
The Court finds the following facts. Kroger, one of the largest grocery retailers in the
world with $115 billion in sales in 2016, has used the Private Selection trademark for its
premium-tier store-brand products for over twenty years. Kroger owns six federal trademark
registrations for the Private Selection marks.
Four of Kroger's six registrations have
incontestable validity because Kroger registered the marks and used them for five years.
Besides Kroger-named stores, Kroger operates 24 other chains of grocery stores throughout the
United States under other names, including Ralph's and Harris Teeter. Most of these other stores
carry Private Selection products.
Lidl, a German grocery company, filed an "Intent-To-Use" trademark application with
the U.S. Patent and Trademark Office (the "PTO") to register Preferred Selection on September
19, 2016. Upon learning of this application, Kroger's in-house counsel contacted Lidl's in-house
counsel opposing the registration.
Kroger later filed an opposition to Lidl's intent-to use
application before the Trademark Trial and Appeal Board. On June 15, 2017, Lidl entered the
U.S. market, opening nine stores and selling its premium store-brand products using the
PreferredSelection mark. Lidl plans to open 100 stores in the U.S. within the next year.
Kroger's Private Selection mark contains a four-leaf clover border and small flourishes
which resemble flowers. Lidl's Preferred Selection mark has a more ornate border and, on most
of its products, has a colored flag reflecting the product's country of origin. A majority of Lidl's
Preferred Selection products have colorful packaging, whereas Kroger's packages contain
generally muted colors with its Private Selection logo on a dark background. Lidl's Preferred
Selection products indicate on the back of the packaging that the products come from Lidl, and
Kroger's Private Selection products do the same.
In 2016, Kroger sold about $2 billion worth of Private Selection products to over 25
million U.S. households. A survey by Professor Isabella Cunningham shows that 54% of
frequent Kroger shoppers recognize the Private Selection mark as coming from a single source,
with 58% of those shoppers identifying the source as Kroger. Only 13% of infrequent Kroger
shoppers or non-Kroger shoppers associate Private Selection with a single source. Before asking
respondents whether the Private Selection logo comes from a particular source, Professor
Curmingham's survey referred to the image as a "logo," which may have led to bias in Kroger's
favor by pre-identifying the Private Selection mark as a logo associated with a brand.
Kroger-brand stores generally have 30,000 square feet of space with over twenty aisles
and tens of thousands of individual barcodes identifying different products (known as "SKUs").
Kroger's family of brands includes some stores with smaller footprints and product offerings.
Lidl's U.S. stores all have the same footprint, with six aisles and around 3000 SKUs. Both
parties advertise theirpremium store brands via mailings, coupons, and internet advertising. Lidl
seeks to distinguish itself from other U.S. grocery stores with its small footprint, modem stores,
and by providing 90% of its offerings from its own private-label goods.
Each party conducted a survey on actual confusion between the Preferred Selection mark
and Kroger's mark. For Kroger, Professor Cunningham conducted a "Squirt" survey in which
she showed survey takers Kroger's Private Selection mark and Lidl's Preferred Selection mark.
Cunningham's survey did not show any other brand's trademarks, and displayed the two marks
within 20 seconds of one another without any intervening questions. Kroger's survey claims to
show a 25% rate of confusion between Kroger's Private Selection mark and Lidl's Preferred
For Lidl, Dr. Deborah Jay conducted an "Eveready" survey which showed
survey takers only Lidl's Preferred Selection products (containing the Preferred Selection mark
on their packaging) and then asked open-ended questions about whether the respondents
associated the products with any particular brand(s). Dr. Jay's survey shows a 2% rate of
Kroger believes that Lidl purposely targeted its mark to take advantage of the customer
familiarity and brand loyalty Kroger's mark has earned.
II. STANDARD OF REVIEW
"A plaintiff seeking a preliminary injunction must establish  that he is likely to
succeed on the merits,  that he is likely to suffer irreparable harm in the absence of
preliminary relief,  that the balance of equities tips in his favor, and  that an injunction is in
the public interest." Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008); see also
Real Truth About Obama, Inc. v. Fed. Election Comm 'n, 575 F.3d 342, 345^7 (4th Cir. 2009),
vacated on other grounds 559 U.S. 1089 (2010). A preliminary injunction is an extraordinary
remedy and the plaintiff "must demonstrate [these factors] by 'a clear showing.'" Id. at 345
Although Kroger brings five claims against Lidl, it asserts only two of its counts in
support of its motion for a preliminary injunction: trademark infringement and dilution. Kroger
fails to show a likelihood of success on the merits for either of its asserted claims, and the other
Winter factors weigh against a preliminary injunction.
A, Trademark Infrinsement
The ultimate question, for purposes of determining liability in trademark infringement
actions, is "whether there exists a 'likelihood that an appreciable number of ordinarily prudent
purchasers will be misled, or indeed simply confused, as to the source of the goods in question.'"
Perini Corp. v. Perini Const., Inc., 915 F.2d 121, 127 (4th Cir. 1990) (citations omitted). To
prevail on a trademark infringement claim under the Lanham Act, "the trademark holder must
prove: (1) that it possesses a mark; (2) that the [opposing party] used the mark; (3) that the
[opposing party's] use of the mark occurred Mn commerce'; (4) that the [opposing party] used
the mark 'in connection with the sale, offering for sale, distribution, or advertising' of goods or
services; and (5) that the [opposing party] used the mark in a manner likely to confuse
consumers." Lamparello v. Falwell, 420 F.3d 309, 313 (4th Cir. 2005).' The parties stipulated
to the first four factors, so the Court addresses only the last factor: whether Lidl uses its mark in
a manner likely to confuse consumers.
A balance of the following nine factors determines the likelihood of confusion to
consumers: (1) the strength or distinctiveness of the mark; (2) the similarity of the two marks;
(3) the similarity of the goods and services that the marks identify; (4) the similarity of the
facilities that the two parties use in their business; (5) the similarity of the advertising the two
parties use; (6) the defendant's intent; (7) actual confusion; (8) the quality of the defendant's
product; and (9) the sophistication of the consuming public. Pizzeria Uno v. Temple, 747 F.2d
1522, 1527 (4th Cir. 1984); Sara Lee v. Kayser-Roth, 81 F.3d 455, 463-64 (4th Cir. 1996). The
factors are not of equal importance and are not always relevant in a particular case. AnheuserBusch, Inc. V. L&L Wings, Inc., 962 F.2d 316, 320 (4th Cir. 1992) (noting that the Pizzeria Uno
factors are not meant to be a rigid formula, but simply a guide or list of various considerations
that may be relevant in determining likelihood of confusion).
Reviewing these nine factors, the court finds that Kroger has not made a clear showing of
likelihood of confusion.
i. Streneth or descrivtiveness ofthe mark
Courts consider the strength or descriptiveness of a mark "paramount" in the likelihood
of confusion analysis. Pizzeria Uno, lAl F.2d at 1527. A mark's strength consists of both its
conceptual strength and its commercial strength. Courts determine a mark's conceptual strength
' Citing People for the Ethical Treatment ofAnimals v. Doughney, 263 F.3d 359, 364 (4th Cir.
2001) (citing 15 U.S.C. §§ 1114, 1125; Lone Star Steakhouse & Saloon, Inc. v. Alpha ofVa.,
Inc., 43 F.3d 922, 930 (4th Cir. 1995)).
by placing the mark into one of four groups in an ascending level of descriptiveness: (1) generic;
(2) descriptive; (3) suggestive; or (4) arbitrary or fanciful. George & Co. LLC v. Imagination
Entm't Ltd., 575 F.3d 383, 393-94 (4th Cir. 2009). Generic marks cannot receive trademark
registration with the PTO, and descriptive marks qualify for registration only if they have
developed a secondary meaning. Id. at 394. "[S]econdary meaning is shorthand for saying that a
descriptive mark has become sufficiently distinctive to establish a mental association in buyers'
minds between the alleged mark and a single source of the product." Id. Suggestive marks are
more distinct than descriptive ones, and arbitrary or fanciful marks have the highest
distinctiveness and therefore receive the greatest level of trademark protection.
After a court has decided whether the mark is suggestive or descriptive, it must still
determine the mark's commercial strength. Even a suggestive mark may be found commercially
weak because the "strength of a mark uhimately depends on the degree to which the designation
is associated by prospective purchasers with a particular source." Id. at 396 (finding a suggestive
mark weak where the record lacked evidence demonstrating that consumers associate the mark
with the mark holder). The commercial strength of a mark "entails a rigorous evidentiary
standard" that considers six factors: (1) the plaintiffs advertising expenditures; (2) consumer
To determine whether a mark is suggestive or descriptive, a court does not look at the mark in a
vacuum, but to how the "mark is used in connection with" the products or services it represents.
"Suggestive marks ... do not describe a product's features but merely suggest them. In other
words, the exercise of some imagination is required to associate a suggestive mark with the
product. Examples of suggestive marks are 'Coppertone®, Orange Crush®, and Playboy®.'
Descriptive marks define a particular characteristic of the product in a way that does not require
any exercise of the imagination. Examples of descriptive marks include 'After Tan post-tanning
lotion' and '5 Minute glue.'" George & Co. LLC v. Imagination Entm't Ltd., 575 F.3d 383, 394
(4th Cir. 2009) (internal citations omitted). The PTO's determination of whether a mark is
descriptive or suggestive serves as prima facie evidence of whether a mark is descriptive or
suggestive, but the parties here have not provided evidence about whether the PTO granted
Kroger's Private Selection marks without requiring evidence of secondary meaning. George &
Co. LLC, 575 F.3d at 394.
studies linking the mark to a source; (3) the plaintiffs record of sales success; (4) unsolicited
media coverage of the plaintiffs business; (5) attempts to plagiarize the mark; and (6) the length
and exclusivity of the plaintiffs use of the mark. Id. at 395 (citations omitted). Commercial
strength tests whether "a substantial number of present or prospective customers" associate the
mark with a source. CareFirst ofMaryland, Inc. v. First Care, P.C.^ 434 F.3d 263, 269 (4th Cir.
Overall, Kroger's evidence on Private Selection's strength weighs against a preliminary
injunction. Even assuming the Private Selection mark has suggestive distinctiveness,^ Kroger
has failed to make a clear showing of Private Selection's commercial strength. Kroger has not
submitted evidence of its advertising expenditures related to Private Selection or shown any
attempts to plagiarize the mark outside of the allegations in this case. Next, although Private
Selection products generated $2 billion in sales last year, these sales account for less than 2% of
Kroger's overall sales of $115 billion. Taken in context, the large volume of Private Selection
sales does not weigh strongly in favor of the Private Selection's overall commercial strength
because it accounts for a relatively small percentage of Kroger's sales. Most significantly,
Kroger fails to clearly show that consumers actually link Private Selection with a particular
source. Professor Cunningham concludes that 54%of the public identifies Private Selection with
a single source, but her calculation includes only those persons who perform at least half of the
grocery shopping in their household, have shopped at Kroger in the past month, and plan to shop
at Kroger in the upcoming month. By eliminating all other consumers, Cunningham's survey
fails to make a clear showing that prospective customers, rather than current customers, link the
Preferred Selection mark to a source. For example, Lidl shows that only 13% of infrequent
^The Court reserves ruling on Private Selection's ultimate conceptual strength at this time.
grocery shoppers or infrequent Kroger shoppers associate the mark with a source.
points to potential bias in Professor Cunningham's survey which further weakens the probative
value of her conclusions on commercial strength.
Kroger has admitted that this case will turn, in large part, on a battle of experts. Both
sides presented expert testimony at the hearing on the preliminary injunction, and the experts are
in absolute conflict as to the strength of Kroger's trademark, and the likelihood of confusion
In short, Kroger's evidence of Private Selection's strength fails to clearly show a
likelihood of confusion claim, which cuts against its likelihood of success on the merits.
a. The similarity ofthe two marks
Courts judge similarity by the sound, appearance, and meaning of the two marks.
Pizzeria Uno, 747 F.2d at 1534-35. A court "must examine [the mark] in the context in which it
is seen by the ordinary consumer," and differences in public presentation can cut against textual
similarity. CareFirst, 434 F.3d at 271-72 (quoting Anheuser-Busch, Inc., 962 F.2d at 319).
The overall similarities of the two marks weigh against a likelihood of confusion. Private
Selection and Preferred Selection have a similar sound, but they have different meanings and
dissimilar appearances. With respect to the terms' meanings. Private Selection refers to an
exclusive selection, whereas Preferred Selection directly connotes a better quality product. Both
terms convey the general idea of a premium product, but they do so through different means.
Further, in the Court's view, the marks seen in their context (in either a Kroger or a Lidl store)
suggest that they represent a premium store-brand product. This suggestion, combined with the
fact that the back of the packages indicate that either Lidl or Kroger distributes the product, cuts
against their similarity.
The two marks also vary significantly in appearance, especially when considered in the
context seen by the consuming public. Lidl's mark has a highly ornamental border and often
appears in color and with the flag of the product's country of origin. Kroger's mark contains
only a small flourish in its border and generally appears with light text over a dark background.
Lidl's food packages generally contain more vibrant colors than Kroger's packages, which
further differentiate the marks when seen in context.
For these reasons, the marks' overall
dissimilarities weigh against of a likelihood of confusion.
Hi. Similarities ofparties' soods and services, facilities, and advertisins
The parties use the marks at issue on their premium store-brand goods, and this factor
weighs in favor of a likelihood of confusion. Next, both parties sell the products at issue in
grocery stores, but Lidl's stores differ greatly in both size and appearance from Kroger's Krogerbranded stores, which cuts against a likelihood of confusion. Both stores also advertise in
similar ways, which weighs in favor of a likelihood of confusion. Overall, these factors do not
hold great weight in the likelihood of confusion analysis.
/v. The defendant's intent
The defendant's intent is "sometimes a major factor in infringement cases." Pizzeria
Uno, 747 F.2d at 1535. In the case before the Court, Kroger fails to show that Lidl intended to
confuse consumers. Kroger points to the proximity of Lidl stores to Kroger stores and to the
similarities of the words Private Selection and Preferred Selection as proof of intent, but Lidl
offers convincing testimony that it actually seeks to disassociate itself with Kroger and other
U.S. supermarkets with its small stores and limited product offerings. Kroger fails to clearly
show intent, and this factor weighs against a likelihood of confusion.
V. Actual confusion
Although a plaintiff need not show actual confusion to demonstrate trademark
infringement, evidence of actual confusion is "often paramount" in the likelihood-of-confusion
analysis. CareFirsty 434 F.3d at 268 (citing Lyons P'ship, LP. v. Morris Costumes, Inc., 243
F.3d 789, 804 (4th Cir.2001)).
A plaintiff may show actual confusion through anecdotal
evidence or by competent survey evidence. Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144,
157 (4th Cir. 2012). Survey evidence showing consumer confusion of "much below 10%"
clearly favors the defendant in a trademark infi*ingement case. See Sara Lee Corp. v. Kayser-
Roth Corp., 81 F.3d 455,467 n.l5 (4th Cir. 1996)."
Two common methods for surveying consumers for likelihood of confusion are the
"Eveready" method and the "Squirt" method. Valador, Inc. v. HTC Corp., No. l:16-cv-1162,
2017 WL 1037589, at *10 (E.D. Va. Mar. 15, 2017) (citing 6 McCarthy on Trademarks §
32:173:50-174). Both methodologies must show the survey taker"the entire mark as used in the
marketplace." Id. The Eveready format, which Lidl uses here, provides respondents with only
the allegedly infringing mark and does not inform them of the asserted mark.^ The Squirt
format, which Kroger uses, presents respondents with both conflicting marks. Kroger's survey
shows a 25% rate of confusion while Lidl's survey shows a 2% rate of confusion. Lidl also
shows that Kroger's Squirt survey failed to show the trademarks as they appear in the
^ Referring to Henri's FoodProducts Co., Inc. v. Kraft, Inc., 717 F.2d 352, 358 (7th Cir. 1983)
where the court cited several cases holding that survey evidence indicating ten to twelve percent
confusion was sufficient to demonstrate actual confusion, but found that 7.6% confusion
weighed against infringement.
^The Eveready method is considered "particularly apt where the plaintiffs senior mark is strong
and widely-recognized," as it "assumes that they are aware of the mark from their prior
experience." Valador, Inc., 2017 WL 1037589, at *10. At the hearing on the preliminary
injunction, Professor Cunningham acknowledged that Thomas McCarthy, who wrote the "bible"
on trademarks, calls the Eveready survey the "gold standard."
marketplace because (1) it did not show the marks on actual products and (2) showed the logos
back to back, without any intervening images or questions, despite the fact that consumers
encounter grocery items in competing stores with long lapses in between. Evidence of actual
confusion is "often paramount," but Kroger fails to make a clear showing on this factor due to
Lidl's competing survey and the potential flaws in Kroger's methodology.
V/. The quality ofthe defendant's products and the sophistication ofthe consumers
The final two factors do not weigh one way or another in this case. First, Kroger does not
provide information on the actual quality, or lack thereof, of Lidl's Preferred Selection products.
Next, consumer sophistication only plays a key role when "the relevant market is not the public
at-large." Sara Lee Corp., 81 F.3d at 466. Here, grocery shoppers are representative of the
broader public and this factor does not demonstrate a likelihood of confusion.
On balance, Kroger fails to make a clear showing that the nine likelihood-of-confusion
factors weigh in favor of its success on the merits. Most importantly, Kroger's surveys on
secondary meaning and actual confusion suffer from flaws that prevent the Court from finding
that Kroger will likely succeed in showing a likelihood of confusion. The surveys' flaws do not
render them valueless, but they create some doubt about the strength of the Private Selection
mark in the marketplace and about the level of actual confusion among consumers. Only the
similarity of the products and the similarity of their advertising weigh in favor of a likelihood of
confusion, but these two factors do not tilt the scale in Kroger's favor.
On the whole, Kroger's
evidence at the preliminary injunction stage fails to make a clear showing of a risk that "an
appreciable number" of consumers would be confused by Lidl's Preferred Selection mark.
"To succeed on a dilution claim, the plaintiff must show that (1) it owns a famous,
distinctive mark, (2) the defendant uses an allegedly diluting mark in commerce, (3) an
association arose from the similarity of the marks, and (4) the association is likely to impair the
distinctiveness of the famous mark." Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 163
(4th Cir. 2014) (citing Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252,
264-65 (4th Cir. 2007).
Under the first prong, "[a] mark is famous if it is widely recognized by the general
consuming public of the United States as a designation of source of the goods or services of the
mark's owner." 15 U.S.C. § 1125(c)(2)(A). Courts consider the following factors, among
others, to determine if a mark has the requisite level of recognition: (1) "the duration, extent, and
geographic reach of advertising and publicity of the mark"; (2) "the amount, volume, and
geographic extent of sales of goods or services offered under the mark"; (3) "the extent of actual
recognition of the mark"; and (4) whether the mark was registered. 15 U.S.C. § 1125(c)(2)(A)(iiv). For a mark to be famous under 15 U.S.C. § 1125, the general public must widely associate
the mark with the mark's owner, as opposed to merely associating the mark with any source as
under the secondary meaning analysis. Dilution protection is given to marks that are "truly
prominent and renowned" and are considered "household names." Rosetta Stone, 616 F.3d at
Kroger attempts to use its expert's survey on secondary meaning to establish Private
Selection as a famous mark. Forgiving the potential flaws in Professor Cunningham's survey,
she admits that the survey shows that only about one-third of consumers who perform at least
halfof the grocery shopping in theirhousehold and who shop at Kroger every one to two months
identify Private Selection with Kroger. Kroger's own survey shows that less than a third of its
regular customers associate Private Selection with Kroger. Kroger, therefore, fails to clearly
show that Private Selection is so prominent in the American consciousness as to be a household
C. Other Winter Factors
The remaining Winter factors weigh against a preliminary injunction. Kroger has shown
only the possibility of consumer confusion and thus only the possibility of irreparable harm—
such a showing does not warrant a preliminary injunction. The balance of the hardships also
weighs in favor of Lidl. While Kroger has not shown a likelihood of harm, Lidl has only one
chance to laimch its stores in a new country and would likely suffer if it had to do so without its
line of premium products. Finally, the public interest lies in robust competition, and the risk
posed to Kroger by Lidl's Preferred Selection mark does not outweigh that interest.
For the reasons stated above, Kroger has not clearly shown that it is likely to succeed on
the merits of its claims. Accordingly, the Court denies the motion for preliminary injunction.
An appropriate Order shall issue.
Let the Clerk send a copy of this Opinion to all counsel of record.
John A. Gibney, Jry
United States Distncf jUdge
Date: Julv 31.2017
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